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Forward Auctions

In a Forward Auction, a company with excess credits initiates an auction to sell credits and companies needing credits bid to buy them. As the auction proceeds, bidding drives up the price of the credits. When the auction ends, the company that has offered to pay the most for the credits is the winner.

EXAMPLE

Green Motors initiates an auction to SELL 100 credits.

Auction Starts

Companies A, B & C need credits and so they enter the auction and place bids as follows:

Day 1, 10:00 am, Company A bids $50,000 to buy credits
Day 2, 3:00 pm, Company B bids $60,000 to buy credits
Day 2, 5:00 pm, Company A bids $70,000 to buy credits
Day 3, 2:00 pm, Company C bids $100,000 to buy credits

In a Forward Auction, a company with excess credits initiates an auction to sell credits and companies needing credits bid to buy them. As the auction proceeds, bidding drives up the price of the credits. When the auction ends, the company that has offered to pay the most for the credits is the winner.

In a Reverse Auction, a company needing credits initiates an auction to purchase credits and companies with excess credits bid to sell their credits to that company. As the auction proceeds, bidding drives the price of the credits down. When the auction ends, the company that has offered to sell their credits for the least amount of money is the winner.